Tag Archives: taxation

“It just isn’t going to work, and it’s very interesting that the man who invented this type of what I call a voodoo economic policy is Art Laffer, a California economist.” – George H.W. Bush, Carnegie Mellon University, April 10, 1980

I’m frightened for the United States, and it’s not just because of my disdain for our faux president, Donald Trump. I’m genuinely concerned about what could happen over the next few years.

In the above quote, George H.W. Bush was referring to the plans of fellow Republican and 1980 presidential candidate Ronald Reagan for revitalizing a stagnant U.S. economy. Then, when Reagan won in most of the primaries, his camp offered Bush the vice-presidential position, and the former Texas congressman shut up about economics. In 1980, the nation was in a bad financial situation. The costs of the Vietnam War, coupled with oil embargoes from OPEC nations, had finally taken their toll. Unemployment stood at nearly 10%; the prime interest rate was 21%; inflation was 14%; home mortgage rates were 17%; and the top marginal tax rate was 70%. In the second quarter of 1980, the U.S. gross domestic product (GDP) declined by 8%. By the end of the year, the overall GDP boasted about $3 trillion (in today’s dollars).

With the help of some Democrats in both houses of the U.S. Congress, Reagan was able to generate an agreement that slashed taxes down to 50% on wages, to 48% on corporate income, and to 20% on capital gains. These measures initially jumpstarted the economy. Average citizens had more expendable income, which they poured back into the economy by purchasing many so-called big ticket items, like vehicle and electronics. By 1990, the size of the U.S. economy had grown from $3 trillion to $6 trillion, with roughly 4 million new businesses and 20 million new jobs created. Although the national debt increased from $1 trillion to $4 trillion during the same period, overall revenues doubled.

Reagan’s economic policies were in line with conservative views on taxation: if we give the “investing class” (meaning, the most affluent) generous tax breaks, they will respond by expanding their businesses or starting new ones, which in turn, will create more products and / or services and more jobs. Along with reduced business regulations (“job killers” in conservative lingo), average citizens will have more income, which of course, they will pour back into the economy. Such growth then will expand the tax base; the additional revenue will replace any money lost to the initial tax cuts.

Ask any frustrated project manager and they will tell you that everything always looks great on paper. While Reagan disciples keep championing his financial moves, the reality is that “Reaganomics” didn’t work out as planned. One thing people forget is a little thing called the Garn-St. Germain Depository Institutions Act of 1982, which rolled back financial regulations that had been established by the administration of Franklin D. Roosevelt to prevent further damage caused by the 1929 stock market crash and the ensuing Great Depression. It’s interesting that Bush’s voodoo comment was made at Carnegie Mellon University. Founded by Andrew Carnegie in 1900 as Carnegie Technical School, it merged with the Mellon Institute of Industrial Research in 1967 to become Carnegie Mellon. The Mellon Institute had been established in 1913 by brothers Andrew and Richard B. Mellon who, like Carnegie, were self-made businessmen and titans of early 20th century America. Andrew Mellon served as Secretary of the Treasury from 1921 – 1932, one of the longest tenures for this position. He created the “trickle-down” economic theory by declaring, “Give tax breaks to large corporations, so that money can trickle down to the general public, in the form of extra jobs.”

But Andrew Mellon is also known for a notoriously rotten hands-off policy with the Great Depression. The banks that failed had put themselves in such a precarious financial position, he believed, and thus, they were responsible for extricating themselves from it. It didn’t seem to matter that these bank failures took people’s money with them; therefore, amplifying the effects of the 1929 crash.

Still, President Reagan – like any good fiscal conservative – held onto these beliefs and eagerly signed the Garn-St. Germain bill. That reduced the number of regulations on financial institutions and allowed them to expand and invest more of their customers’ deposits in various ventures, particularly home mortgages. Again, that looks-great-on-paper ideology swung back around to bite everyone when the Savings & Loans Crisis erupted. Between 1986 and 1995, 1,043 out of the 3,234 savings and loan institutions in the U.S. failed; costing $160 billion overall, with taxpayers footing $132 billion of it. It was the worst series of bank collapses since the Great Depression. That led to the 1990-91 Recession, the longest and most wide-spread economic downturn since the late 1940s. I started working for a large bank in Dallas in April of 1990 and saw the S&L crisis unfold in real time.

Nonetheless, trickle-down economics saw a rebirth with George W. Bush, as his administration further deregulated the banking industry and also deregulated housing. Combined with the costs of wars in Afghanistan and Iraq, the U.S. economy almost completely collapsed at the end of 2008. The 2007-08 Recession was the worst economic downturn since the Great Depression. Unemployment reached double digits for the first time since the start of the Reagan era, as millions of citizens lost their homes and their savings. Had it not been for such programs as the Federal Deposit Insurance Corporation (the FDIC, established by Roosevelt), we surely would have plunged into another depression.

Now, with Donald Trump in office, I fear we’re headed for the same morass. On December 22, 2017, Trump signed the Tax Cuts and Jobs Act; the largest overhaul of the U.S. tax code in 30 years. Financial prognosticators have already forecast the act will raise the federal deficit by hundreds of billions of U.S. dollars over the next 10 years. The law cuts individual taxes temporarily, but cuts corporate tax rates permanently. As suspected, the most affluent citizens will benefit greatly, as they experience a significant reduction in their taxes. The rest of us lowly peons may see a tax increase after those temporary provisions expire in 2025.

You know that classic definition of insanity? Doing the same thing over and over, while expecting different results. It’s more like, well, if you keep doing stupid shit, stupid shit will keep happening!

Ignore Russia-gate for a moment and the fact Melania’s side of the First Bed is colder than a Chicago winter. This past week Trump visited the World Economic Forum (WEF) annual meeting in Davos, Switzerland. This is where the most elite members of the business world meet (conspire) with leaders of developed nations to create economic policies and decide what’s best for us peons. Kind of like evangelical Christians often meet to decide what people should see and read. They’ve set themselves up as the righteous few; the ones who supposedly understand exactly what works and what doesn’t and are divinely compelled to bestow such knowledge upon the rest of us.

Trump ran his presidential campaign on the wave of anti-Washington sentiment; appealing to average citizens about reviving a once-lost “Great America” with a variety of clever ruses: ban Muslims, build a wall along the Mexican border, etc. So many people, of course, bought into it. Like Ronald Reagan, Trump was able to tap into that sensitive nerve of everyday angst; spitting out a slew of quaint buzz words to appeal to average folks. He had said he would never take part in a WEF convention. Yet, there he was; leading a parade of those self-righteous few into another kind of revitalization: the Gilded Age.

I doubt if most Trump voters even know what Davos means and how it could impact their lives. Understand, though, that Switzerland is a place where Hollywood celebrities often went for a retreat or a little vacation – code words for cosmetic surgery; long before Phyllis Diller made it openly acceptable. That’s essentially what Donald Trump did this past week. He flew to Davos to tell the world, “America first is not America alone.”

Shortly after Donald Trump was sworn into office as the 45th President of the United States, I referred to various photographs of the Trump family in their multi-million-dollar New York penthouse residence. “The Donald” is, of course, featured prominently front and center, with his (third) glamorous, trophy wife perched nearby; along with their son, Baron, and the real estate magnate’s adult children. Almost as prominent are the slew of plush, gilded furnishings spread throughout the abode. I kept thinking I’d seen similar photographs before; various pictures from newspapers and magazine, as well as recollections of a TV show that truly embodied 1980s-era chic and gluttony: “Lifestyles of the Rich and Famous.” (Trump was featured in the very first episode and made recurring appearances.)

At one point, though, I turned to my massive collection of books and spotted one that displayed an even more accurate depiction of the Trump family; another clan who lived long ago in similar plush surroundings, perched high above the lowly masses. Lindsey Hughes’ “The Romanovs: Ruling Russia 1613 – 1917” describes the life and times of Russia’s last monarchal family. For more than 300 years, the Romanovs directly impacted world politics with their wealth and power; creating a massive empire that – even in today’s watered-down version – stretches across two continents. From Tsar Michael to Tsar Nicholas II, the Romanovs maintained a steady grip on the region; impressing their subjects and striking fear in their enemies.

But, by the time the dynasty marked its tercentenary in 1913, that grip had begun to weaken. Like the rest of Europe’s royal families, the Romanovs remained encapsulated in their heavily-fortified palatial environs; far removed from the sundry plights tormenting their own people and oblivious to the real world lurking outside those jewel-encrusted walls. Nicholas II was the first of the European monarchs to be ousted from power, as World War I intruded into Russian territory, and a growing internal revolution stalked the Romanov family.

While the assassination of Austria’s Archduke Franz Ferdinand and his wife, Sophia, essentially marked the start of World War I, the death of the Romanovs signified the end – not just to the war, but also to the long-held concept that power and wealth are best held in the hands and pockets of a blessed few and that those few are part of the same bloodline that is never to be disturbed or questioned. It was shocking enough to international onlookers that a single gunman was able to kill Franz and Sophia with a few shots from a pistol; even as many outside of Europe initially wondered where was this place called Austria-Hungary. But, as news of the Romanovs’ demise trickled out, the anger and frustration of an oppressed people became brutally apparent. Nicholas and his immediate family, along with a handful of servants, were peppered with bullets in a basement far removed from their stately home; their bodies burned beyond recognition and dumped in neighboring woods.

The Trump family in their New York penthouse abode.

World War I was actually the culmination of the growing anarchist movement, which had its genesis in the heated anger of economic and social inequality among Europe’s working classes, before spreading westward across the Atlantic to plant itself in the U.S. and Canada. Even México had succumbed to the wrath of the peasant masses; with outlaws Francisco “Pancho” Diaz and Emiliano Zapata joining forces to lead a revolt against a semi-monarchal dynasty of wealthy landowners and bankers.

This was the dawn of the 20th century; where ordinary people – the one who really keep a nation moving – finally stood up and collectively announced, “Enough!” The rampages continued, as Europe began losing their colonial holdings in Africa and elsewhere, and Latin American nations saw military dictatorships crumble in the face of concerted human rights’ campaigns. One of the 20th century’s last acts of peasant anarchy came with the collapse of the Soviet Union. In Romania, the chaos became lethal when leader Nicolae Ceausescu and his wife, Elena, were dragged before a court trial staged by their otherwise lowly subjects, found guilty and lynched in public. That something so horrific could happen in 1989 shocked the world. But, for the oppressed peoples of staunchly communist Romania, it was perhaps the best Christmas present they’d ever had.

In 1900, China’s Boxer Rebellion was a desperate attempt by commoners to boot out European interlopers, which included assaults on Christian missionaries and converts. Some 100,000 people lost their lives in the various battles that summer. But a growing dissatisfaction towards the Qing Dynasty and the family of Emperor Puyi (sometimes spelled P’u-i) compelled the working classes to descend upon the sacred and mysterious “Forbidden City.” Puyi was only 3 years old when he ascended to the throne in 1908; less than four years later he was forced to abdicate and lived out the rest of his life as an undistinguished commoner. At the start of the 20th century, it seemed that China was poised to endure the same experience as the African continent: be carved up by European colonialists. But, if the Chinese people no longer wanted single family rule, did anyone believe they’d let bands of foreigners from the other side of the globe do the same? By the 1930s, China had evicted the Europeans.

World War II fractured Europe. A few royal families managed to survive; most notably in Great Britain. But they were all financially and morally exhausted. This culminated in the U.K. losing their colonial hold on India and Pakistan in 1947. Next came the vast continent of Africa, where European decolonialization occurred over the ensuing four decades; a massive undertaking that involved millions of people on a scale the world had never experienced before.

Imprisoned by the British in 1953 following the Mau Mau uprising and exiled in 1959, Jomo Kenyatta later emerged as one of the best-known African leaders. He served as Kenya’s first president from 1967 – 1978 and founded various pan-African nationalist movements.

In the Middle East, anarchism produced schizophrenic results. Anti-royal sentiments led to the 1973 deposition of the Barakzai, Afghanistan’s royal family. That may have set the stage for the Soviet Union’s bloody but futile attempt to annex that country in 1979. However, the U.S. became unexpectedly mired in the antagonism of the Iranian populace towards their own royal family, the Pahlavis. Shah Reza Pahlavi had crowned himself emperor in 1967 and led a brutal regime where dissidence was punished with unprecedented violence and oppression – tools common among wicked oligarchs. Pahlavi’s 1978 ouster led to the notorious Iran Hostage Crisis, which caught both the U.S. and the world completely off-guard. Concerned more with the Soviet threat and the oddly-christened “Cold War,” the U.S. government unwittingly experienced its first battle with Islamic extremism.

Elsewhere in the Middle East, royal families held on in Jordan and Syria. The discovery of oil on the Arabian Peninsula in the 1930s allowed the region’s ruling families and their subjects to be pulled up from the doldrums of a tribal / fiefdom-style existence and dropped into the vats of unimaginable wealth. No one seemed to care that women couldn’t drive cars, much less vote.

Average Mexican citizens rose up in 1910 to depose President Porfirio Diaz who ruled over them off and on for nearly four decades.

While anarchist anger dominated the 20th century, does the same hold true now? Studying the Trump clan, I can’t help but conjure up images of the Romanovs. Economic inequality is just as great now as it was a hundred years ago. We’ve returned to that “Gilded Age” period where the bulk of the world’s wealth and power sit in the grubby hands of a privileged few. The recent “Great Recession” was the worst economic downturn the U.S. had experienced since the “Great Depression.” Both debacles were the result of greed and political incompetence; the former mess instigated by the verbally-challenged scion of another monarchal-type dynasty: the Bush family. Aside from producing two of the worst presidencies within a generation, the Bush clan’s close ties to the Saudi royal family essentially allowed planning for and execution of the 9/11 events to go unnoticed; thus culminating in one misguided war and another illegitimate one, as the economy glided atop a housing bubble that didn’t just pop – it exploded. If regulations and measures a liberal president had established some eight decades ago hadn’t been in place, both the U.S. economy and the U.S. populace would have sunk into chaotic and murderous oblivion.

Power and wealth usually go together; conjoined twins that sometimes have no mercy for the commoners squirming beneath them. The leftist “Occupy Wall Street” movement didn’t gain as much traction as the right-wing “Tea Party,” which claimed passage of the Affordable Care Act (ACA) in 2010 as the seeds of their founding; when, in fact, it was the election of the nation’s first biracial president that pissed them off. If they were so upset about undue taxation, they would have put blame for the economic downturn where it belonged: on the backs of their own Washington leaders who keep propagating the myth of “trickle-down economics.”

But the rise of a foul-mouthed, thrice-married bombastic businessman to the highest office in the land has lit another fire beneath millions of ordinary Americans frustrated with a “jobless recovery”; no one going to jail for causing the recent banking / home loan debacle; and endless conflicts in the Middle East. The illegitimacy of Donald Trump’s placement in the White House makes a mockery of the American democratic experience. Our 18th century predecessors carefully designed a unique concept of governing and valiantly fought against the very people who brought them here. The United States was an outlandish experiment that could have gone seriously wrong if so many people hadn’t realized its true value and potential over the ensuing centuries. As a nation, we didn’t want a group of self-righteous elitists – families riddled with colorblindness, hemophilia and unbridled arrogance – to rule over us and not be questioned. Our American forbears understood that humanity must work as a unit to achieve the best possible society. The various civil rights actions of the past 200 years – from abolitionism to gay/lesbian rights – have helped to refine this strange idea known as democracy.

Looking again at the Trump clan, I still can’t help but think of the Romanovs and realize how much they all have in common. However, I don’t wish the same fate upon the Trumps. As brutal as we often seem to the international community, that’s not what Americans do or who we are.

Either way, we didn’t want or need a royal family 240 years ago to impose its fickle will upon our lives – and we don’t want or need one now.

Film footage of Tsar Nicholas II’s coronation in May 1896. It’s one of the earliest known (and one of the fewest surviving) motion pictures and the first known example of the new medium utilized to capture a major news event.

I’ve been paying for those lazy welfare fuckers for over 30 years! I’m not talking about unemployment or social security! People pay into that. But, I can’t stand all these people who sit around on their butts – fucking, getting drunk, playing dominoes and trying to figure out ways to take things from the rest of us. That’s why people are crossing the border illegally from México. That goes for corporate welfare, too! We hard-working folks need all the help we can get.

This puts the taxation mess into perspective. The wealthiest 10% still won’t be scrambling to update their resumes should tax rates be evened out, like they were in the 1990’s. In other words, Ann Romney really won’t have to go out and find a job for the first time in her adult life. Besides, she’ll have a stroke when she realizes, at her age, it’s tough out there. Source.